United Liberty

The legal battle between the Koch brothers and Ed Crane over the future of the Cato Institute may or may not finally be finished. Details of the supposed settlement have not yet been made clear, but here is what has been reported up to this point:

“Looks like we’ve come to an accommodation with the Koch brothers,” Cato founder and President Ed Crane said in a Tuesday e-mail to employees.

Crane said that staffers will be briefed on Monday on the “settlement” by Cato Chairman Bob Levy and John Allison, a prominent libertarian and former BB&T chief executive officer, who mediated the negotiations. “It will be great to get all this unpleasantness behind us,” Crane said.

In a follow up email to staff, Crane cautioned that negotiations are ongoing.

The deal will settle a lawsuit that the Koch brothers filed in February over shares that determine control of Cato. It results from the original division of shares between the two Koch brothers, Crane, and the late Cato Chairman William Niskanen.

After Niskanen died of stroke complications in October, the Koch brothers claimed that a founding shareholder agreement gave them the option to buy his shares. Crane held that they should go to Niskanen’s widow, which would leave him in effective control of the organization.

The lawsuit sparked concern that the Koch brothers, whose influence is the subject of widespread discussion by liberals and who have funded tea party-linked groups such as Americans for Prosperity, would seize control and force Cato, which has retained a strong nonpartisan, libertarian identity, to more closely hew to Republican positions; the worry was that the institute would end up resembling organizations such as the Heritage Foundation and the American Enterprise Institute.

The settlement involves an agreement to dissolve the shareholder agreement. In addition, Crane is expected to retire under a deal that allows him to select his successor, though the Koch brothers could veto the choice.

There is, however, a wrinkle here that sounds ominous. Dave Weigel, a former contributor to Reason who currently writes at Slate, noted yesterday that Bob Levy, chairman of the Cato Institute, dispute the reports. Weigel posted via Twitter:

Cato board chairman Bob Levy: “The story in the National Journal is both incorrect and incomplete.” No details now, more Monday.

Many of us in the Liberty Movement were concerned about the direction the Cato Institute would take under control of the Kochs. While they certainly have their place in the movement, they are overtly political and have become divisive figures. On the other hand, Cato focuses on policy issues where independence is incredibly important; if not essential.

With that said, it looks like mistakes were made on both sides, based on my reading of the situation. The Koch brothers’ lawsuit seems like a blatant power grab; however, the move by Crane and Levy to add new directors to the board to exert more control didn’t exactly strike me as a good move.

Either way this is going, it looks like we’re waiting until Monday to find out any real details that can provide us with insight on the settlement, if there is one at all.